In 2024, data from the General Administration of Customs of China showed that the cumulative steel export from January to June was 53.40 million tons, an increase of 24.0% year-on-year. The cumulative steel import from January to June was 3.617 million tons, a year-on-year decrease of 3.3%. The net export of steel was 49.783 million tons, an increase of 9.94 million tons year-on-year, an increase of 25%. China is an important participant in the global steel market.

Ⅰ The Analysis of China's Export Pattern

First, as an important participant in the global steel trade, China participates in the export of a wide variety of steel products. In terms of varieties, my country's main steel export varieties are plates, accounting for 69%; bars and wires, accounting for 11%; pipes accounting for 10%; and angle profiles accounting for 5%. In 2024, China's plate exports will increase significantly.

Secondly, China's steel exports are mainly to Asia and Africa. Specifically, Asia accounts for about 71%, of which Southeast Asian countries account for 31%. Africa is second, accounting for 12%; South America is 9%; Europe accounts for 6%. In 2024, China's export growth will mainly be in Asia. The reason is that the countries along the Belt and Road are in a period of rapid economic growth. The demand for steel in these countries is strong, and their geographical location is close to China, so steel trade is relatively convenient.

China is the world's largest steel exporter. In 2023, China's steel exports accounted for 26% of the global steel trade volume. One of the advantages of China's steel exports is price. For example, as of July 16, China's export FOB price of hot-rolled coils was US$517/ton, much lower than Japan, South Korea, Turkey, Europe, and the United States. On the one hand, China's raw materials are relatively abundant and the cost is relatively low. On the other hand, China's steel production capacity is high, while domestic steel demand is low. Steel exports have become an important channel to alleviate China's domestic inventory pressure. Domestic steel prices are in the global price trough, and the fact that the RMB exchange rate is still hovering at a low level makes the price of steel exports low.

Ⅱ Analysis of Steel Pattern in Shandong(China)

Shandong Province is one of the top three steel provinces in China. As of the end of 2021, the total steel production capacity in Shandong Province is about 90 million tons. Well-known steel brands in Shandong include Weifang Special Steel, Luli Steel, Juneng Special Steel, and Rizhao Steel.

In the distribution of production capacity in Shandong, color-coated products, galvanized products, and aluminum-zinc-coated products in Binzhou account for a large proportion; the trade products in Taian are mainly H-shaped steel and hot-rolled coils; coastal areas such as Qingdao and Rizhao are mainly rebar, I-beams and hot-rolled steel; Liaocheng is mainly steel pipes and cold-rolled steel plates/coils.

1. Feedback from the Factory survey in Binzhou

Color-coated products in Binzhou account for about 2/3, galvanized products account for 1/3, and galvanized aluminum and zinc production capacity accounts for as high as 80-90%.

The production lines of most factories are in production. However, the overall profit level of manufacturers is low, ranging from 2.85 to 4.28 US dollars per ton, which is a significant decrease compared with the same period last year. The number of shutdowns of production lines with lower start-up and shutdown costs has increased this year, and the start-up rate of color-coated production lines is about 50%. Several factories choose to retain several production lines with higher profits or rent out some production lines to ensure corporate profits.

According to feedback from traders, foreign trade and domestic trade production each account for half. Since the Spring Festival, the order situation of color-coated products in the domestic trade market has not been good, especially in the construction field. The demand has shown a shrinking trend.

Only in the first half of the year, the domestic trade demand in Binzhou is weak, and foreign trade maintained an upward trend. The demand for coating and plating foreign trade has maintained a high year-on-year growth. Recently, it has entered the off-season of overseas demand. Affected by seasonal factors such as the rainy season and high temperatures, the number of days for receiving orders has declined slightly. At present, some processing plants have received export orders until the end of June. The orders for July have not been filled yet, and the number of days for receiving orders has decreased year-on-year, but the overall order level is still high, and there is no sign of a sharp decline. It is expected that the export situation will continue to maintain a high year-on-year growth trend in the later period. For example, although the production line of processing plant A has not stopped, the factory's order volume is significantly lower than last year, and the company's profit is lower than last year. The company mainly exports galvanized products to serve the upgrading needs of Southeast Asian manufacturing.

2. Feedback from the factory survey in the Taian

Taian has rich underground mineral resources, complete varieties, and wide distribution. Taian has the characteristics of abundant high-quality minerals and large resource reserves. Among them, iron ore, bauxite, and other resources have sufficient reserves. Therefore, the steel industry in Taian has a good development momentum. Taian's advantageous products are steel profiles and hot-rolled products, among which H-shaped steel and hot-rolled coils have the largest trade volume, and the rest are round steel, angle grooves, etc.

Affected by the sluggish real estate market, domestic demand is weak, and Taian's steel trade volume has shrunk this year. The characteristics of the off-season and peak season this year are not obvious, and orders are more closely related to market fluctuations. Steel inventory has dropped significantly. The average inventory of factories in Taian is 10,000-30,000 tons, and the trade volume is only a few thousand tons.

Hot-rolled coil traders generally reported that demand did not improve significantly in September. Market sentiment is generally sluggish.

For example, Factory A mainly sells steel profile products. The factory's shipments in the first half of the year were lower than the same period last year, and the price was also low. June and July entered the off-season of demand, and the factory shipped less; the trade situation was the worst in August, with 200 tons shipped a day; after mid-August, the factory's trade situation improved. The factory inventory is about 30,000 tons.

3. Feedback from the factory survey in the Liaocheng

Steel pipes are the "blood vessels" of industry. China has become the main producer of the world's "blood vessels" with a production share of more than 60%. Shandong Liaocheng is the steel pipe market with the most complete steel pipe models, the largest scale, the widest sales coverage, and the largest number of employees in China. It is known as China's "Steel Pipe City".

Most of the steel pipe factories in Liaocheng are located in the Economic and Technological Development Zone. There are about 20 large steel pipe factories, more than 400 spot trading companies, more than 300 perforation and finishing mills, and countless trading companies in Liaocheng. According to statistics, the number of employees in the steel industry in Liaocheng is about 100,000, and the transaction volume of the entire industry is estimated to be around 60 billion in 2023.

Liaocheng's steel pipe production is mainly seamless pipes, and there are also some welded pipes, with the output ranking first in Shandong. At present, Liaocheng has become China's steel pipe procurement base, and its products are sold to more than 30 provinces and cities across the country as well as international markets such as the Middle East, Europe, South Korea, Russia, and India. With the development of the steel pipe industry, Liaocheng has become an important domestic steel pipe market center and production and processing center, forming an industrial chain from steel pipe R&D and design, order processing and procurement, steel pipe rolling, steel pipe deep processing, steel pipe equipment manufacturing to logistics distribution.

Most of Liaocheng's steel pipe trade is export trade, and a few companies are engaged in foreign trade and domestic trade at the same time. This year, manufacturers and traders generally reported a significant decline in domestic demand. A guardrail domestic trade company said that this year's orders fell by 1/3 year-on-year. After checking the purchases and exports in May and June, the orders of companies with regular tax-inclusive exports increased significantly, while the orders of companies with tax-free exports decreased. Foreign trade enterprises have indicated that this year's external demand is better. Orders in the second half of this year increased and decreased compared with the first half. Factory orders are generally received in October and November.

In addition to steel pipes, Liaocheng Guan County is also very famous for its cold-rolled sheets, galvanized sheets, color-coated sheets, and other metal sheet products. Guan County factories have both domestic and foreign trade, among which foreign trade is mainly exported to Southeast Asia, South Korea, Russia, Brazil, and other places. According to the current situation feedback, Guan County's cold-rolled sheets, galvanized sheets, color-coated sheets, and other metal sheet products are in good foreign trade, and most are exported to Southeast Asia. However, compared with the same period last year, market sentiment is sluggish, and most factories have stated that they will not easily replenish inventory. The average market inventory remains at more than 100,000 tons.

For example, steel pipe factory A said that this year's export volume is lower than the same period last year, but the factory has not stopped production, and it is looking forward to the situation after October. The main products of Guan County Steel Plant B are galvanized sheets and aluminum-zinc-coated sheets, etc., with a production capacity of 300,000 tons. The steel plant has good foreign trade orders, but the overall profit is not high.

In summary, Shandong has a clear advantage in steel export prices and overseas steel demand continues to remain high. It is expected that steel export demand will remain at a high level in the second half of the year.

Ⅲ Summary

Affected by the terminal market, domestic steel demand will continue to be sluggish, which will lead to inventory backlogs. Therefore, merchants generally begin to seek overseas orders. Domestic steel prices are in the global price trough, and the RMB exchange rate is still hovering at a low level, making China's steel exports more cost-effective.

China's steel export price advantage is obvious, and overseas steel demand continues to remain high. It is expected that steel export demand will remain at a high level in the second half of the year, and the annual net steel export increase will reach 15-20 million tons, and the total amount is expected to exceed 100 million tons.

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Editor: Gianna Hana

Mail: gianna@chinasteelmarket.com

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